Tuesday, March 20, 2012

where support is?

How do you know a support area IS a support area?

1) It's bounced there recently --  up or down.

2) It forms a clear pattern.

  The pattern is either a double top/bottom or more powerfully - the symmetrical triple bottom -- which almost always ensures a big move.

 The move is dictated by:
 a) time between the touches
 b) volume during the pattern
 c) Market Signals
 d) sector strength

for /es or /cl  --  these broad patterns often resolve before turning points...  always after extended moves. 

The trend having been established... the market then proceeds to either run dramatically or create minor patterns --  pennants/flags/wedges

 until it reaches a new resistance area.  This too will often resolve through a double or triple top -- unless the area has been clearly touched before in which case there's no need.

 Today's bottom in /tf was clearly marked by a triple bottom before a fast move and then triple top ended it...   bounced again... and a higher triple top began a move down.

 This bread and butter pattern should be the basis for ALL entries  -- with add-ons after the intial direction goes the intended way.

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